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Investors worldwide have prepared for a new chief executive of the most important country on Earth for months by shedding assets and shivering with dread -- and on Tuesday they got their man.
The new boss of the U.S. Treasury, Federal Reserve, armed forces and dollar, the new director of global trade flows, the new captain of the capitalist system, will be a 47-year-old attorney who grew up about as far from the dark center of power as can be imagined -- in sun-baked Honolulu.
Barack Obama now stands in broad daylight, where skeptical investors in Tokyo, Singapore, Beijing and London can assess the real man instead of the political animal running for election.
I think they will find his intelligence, his oratory, his dedication to public service, his ease at gathering smart advisers, his ability to inspire confidence and his tight management of a brilliant political campaign are all the real deal. As a result, despite his incredibly thin résumé, investors will come to believe he is ready to take on this august job.
But now comes the tough part: Obama faces a domestic economy ravaged by falling home prices, rising unemployment and thinning industrial production. He faces a banking system savaged by epic greed. He faces a public that's more cynical than ever about its leaders. And he faces two wars.
A financial world in turmoil
It's a mess, to be sure, and in many ways, the next two months may represent the apex of the world's hopes for Obama's success at setting everything straight. The next half-dozen U.S. economic problems that arise will be attributed to his predecessor, after all.But the next dozen after that will be laid at his feet. The way he and his team deal with them will determine our success as investors and citizens over the next four to eight years, and the shape of the world in which my children, now 13 and 16, will emerge as adults.
It's almost impossible to say with certainty how Obama will govern as these difficulties arise, for there is nothing in his background that will help us judge. We can only pray that he approaches issues in a holistic way -- not reactively but with a grand plan into which each fresh nuance is thoughtfully fit -- much as he conquered the intricacies of the long presidential race.
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I'm hopeful Obama will turn out to be as successful as Ronald Reagan in this regard. Reagan was no genius in the classic sense, but he had a thoughtful, humanistic vision that guided his path. And for the most part he had a good economic team that cleaned up the titanic mess of the 1980-81 recession and, after an initial 20% decline in the stock market in his first 20 months, delivered us into a bull market that generally prevailed for 25 years.
Obama was sometimes criticized during the campaign for being more of a speechmaker than a lawmaker, but that is not such a bad thing. Smart words, delivered well in public, have incredible power. The ability to inspire confidence in a well-articulated vision can help drive men and women to achieve things that may be well beyond their own imagined abilities. This is something that we have seen repeatedly through history, and it should not be minimized.
Continued: Powerful words for desperate times
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